Sachaknisay Sov is either a poor rural Cambodian with little access to the global economy or an early adopter of a technology solution that could sweep the world and raise two billion of its poorest people out of poverty. It depends on your perspective.

Value In the Unbanked Market

On one hand, Sov is a taxi driver in a small village in Cambodia without much in the way of future prospects or opportunities. On the other hand, he also uses the technology underpinning bitcoin that makes developers and investors in San Francisco and New York millionaires practically overnight. A final point is perhaps the most important: that same technology also gives Sov access to solutions that serve his immediate needs.

A Cambodian cryptocurrency lending app called DApact recently allowed Sov to borrow the equivalent of $500 to carry out urgent repairs to his motorcycle at an interest rate of just five percent compared to the industry rate of 18 percent.

Like hundreds of thousands of impoverished citizens in Cambodia and across Southeast Asia, Sov is benefiting from the application of blockchain technology as a means of solving the problems for real people rather than as a speculative asset.

An emerging group of blockchain and cryptocurrency startups in this part of the world are seeing value in the lower end of the market, which has ignored or been underserved by previous generations of technology.

Many regional firms have discovered that poor rural populations, with low disposable incomes and high incidence of unbanked individuals, still have cheap Android smartphones and internet access, which makes them as valid a consumer segment as the latte-sipping urban middle class in other metropoles.

According to figures from global consulting firm KPMG, seven out of ten people in Southeast Asia are excluded financially. This figure is usually used by governments or in NGO circles, but a new generation of blockchain startups now understand that those seven people are not economically inactive, but merely unbanked. In other words, they are big business for those who know where to tap into the market.

Coins.ph is one such startup operating in the Philippines and Thailand. Founded in 2014, it recently received $5 million in funding from Naspers following years of outstanding success in connecting more than 300 million unbanked people across Southeast Asia with basic banking services on their mobile phones.

Using Coins.ph, unbanked people can use cryptocurrencies to make withdrawals and deposits, paytheir bills, top up their mobile credit and even shop online using virtual credit cards.

Crucially, Coins.ph also offers a vastly cheaper remittance service alternative to the estimated 2.2 million Filipinos working abroad who send money home. Using a conventional money transfer system like Western Union, a Filipino caregiver in the UAE would have to pay $8.52 to send $200 back home. With Coins.ph, this comes down to the equivalent of just $4.

Prospects for the Future

The relationship is not one-sided either. ICOs in Myanmar have raised $10,500,000, a sum far greater than that of Austria or Germany. This difference happens because people in Southeast Asia buy into the promise of cryptocurrencies after experiencing it first hand.

In effect, Southeast Asia is becoming the global center for studying how to effectively mainstream bitcoin and other digital currencies, and it is also becoming an important fundraising market at the same time.

Doubtless, other parts of the world with large populations of unbanked citizens are taking note of the Southeast Asian example as cryptocurrencies move into the next phase of the development and broader acceptance. In parts of Africa and South America, the conditions faced by the poorest two billion people in the world are remarkably similar to those of Southeast Asia. Both regions are stumped by a lack of access to conventional banking services, access to cheap smartphones, and affordable internet connections.

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